In days past, closed borders hampered trade and increased costs to consumers and governments alike. But times change. Markets are opening up, barriers are tumbling down and the free flows of goods, services, investment and ideas mean our economies are integrating as never before. Today, companies are treating the world as their marketplace - and the opportunities for investors, businesses, workers and consumers are better than ever before.
In 1994, Canada, the United States and Mexico launched the North American Free Trade Agreement (NAFTA) and formed the world's largest free trade area. Our decision to open doors and break down barriers is producing a thriving relationship among our three countries - one that has led to strong economic growth in the region and that has helped to fuel global economic growth in recent years. Between 1994 and 1999, Canada's economy grew by an average of 3.3 percent, while the U.S. and Mexican economies grew by an average of 3.9 percent and 3.1 percent, respectively.
Since NAFTA was implemented, trade within North America has increased over 97 percent. All three NAFTA partners now enjoy a bigger piece of a much larger trade pie - and the jobs and economic opportunities created are key to our continued well-being. Merchandise trade1 among NAFTA's partners reached $847 billion (US$570 billion) in 1999, a leap of $343 billion (US$231 billion) in just six years.
NAFTA has resulted in strong and steady growth in merchandise trade and has stimulated trade in services, a sector we expect will grow in the future. NAFTA has benefited all three of its partners and has helped North America become a more prosperous trading region.
NAFTA has increased opportunities for investors. Since 1994, investment in Canada, the United States and Mexico has been dynamic and growing:
While NAFTA's success is usually linked with opening markets to goods and services, its ability to attract foreign investment within the region may prove to be one of the Agreement's most powerful and enduring legacies.
NAFTA has helped create a more integrated North American market. The Agreement strengthens trade by reducing barriers and guaranteeing access to each country's market. This frees businesses to make decisions based on the most efficient use of resources and fosters production-sharing partnerships in which different parts of the manufacturing process are performed throughout the region.
In an integrated market, a company can design a product in one NAFTA country, manufacture parts in a second NAFTA country, assemble the goods in a third NAFTA country and sell the finished items in the region and around the world. Production partnerships in the electronics, automotive and textile industries have helped spark strong growth in these sectors, boosting exports around the world of North American-made goods.
Trade involves companies large and small creating jobs in our communities.
Small and medium-sized companies are the engines of economic opportunity and job growth. They are the most vibrant ingredient of our economies. Their size makes them nimble, their products make them competitive and their energy makes them successful. Recent studies show that 97 percent of Canadian, 96 percent of U.S. and 95 percent of Mexican exporters are small and mediumsized businesses.
When you consider that most new jobs are created by smaller businesses, it is clear that we need to encourage our small and medium-sized enterprises to look abroad for new opportunities - and reap the benefits of being part of North America's dynamic exporting sector.
Even where the bulk of trade and investment flows freely across borders, some disagreements are bound to arise.
That is why NAFTA's partners created an independent and effective rules-based system. In the event of disputes, NAFTA directs the governments concerned to seek to resolve their differences amicably through NAFTA's Committees and Working Groups or other consultations. NAFTA also provides for expeditious and effective panel procedures.
We have seen this system work, experienced its effectiveness and understand its value.
NAFTA partners recognize the importance of enhancing environmental protection, and the need to cooperate in the enforcement of environmental laws. In order to achieve these goals, NAFTA partners have established several institutions through the North American Agreement on Environmental Cooperation.
Along the U.S.-Mexico border the North American Development Bank and the Border Environmental Cooperation Commission are working on the development and financing of environmental infrastructure projects. To date, 40 projects have been certified.
The Commission for Environmental Cooperation (CEC) promotes environmental protection and conservation through projects for pollution prevention, waterways management and wildlife protection, among others. Through the North American Fund for Environmental Cooperation, the CEC has financed over 127 communitybased environmental projects in Canada, Mexico and the United States.
NAFTA delivers real benefits for workers and their families. To secure these benefits an institution-building process has taken place. Through the North American Agreement on Labour Cooperation and its Commission, each NAFTA partner is committed to enforcing its labour laws and to cooperating in areas of industrial relations, employment standards, occupational safety and health, and human resource development, among others.
Since NAFTA took effect, employment has risen in all three NAFTA countries.
During NAFTA's first six years:
Clearly, trade has helped to boost employment in all three countries. New exports create more and better jobs in the home market. Since the Agreement was implemented, all three countries have registered substantial growth in their exports, and a significant portion of total job growth has been export-related.
Six successful years of NAFTA are just the beginning. In the years ahead, opportunities will continue to grow as trade barriers are lowered even further, production partnerships continue to flourish and our global competitiveness solidifies.
Quality of life will continue to improve as consumers across North America gain access to better products at cheaper prices.
Six years, three countries and one NAFTA partnership. It's a formula for economic and social success today and in the years to come.
Pierre S. Pettigrew
Minister for International Trade
Herminio Blanco Mendoza
Secretary of Commerce &
Industrial Development of Mexico
1 Unless otherwise specified, the trade statistics herein refer to merchandise trade and are in Canadian dollars. Each country supplied import data on a customs-value basis. Data source: U.S. Department of Commerce (USDOC), Statistics Canada and Secretaría de Comercio y Fomento Industrial (SECOFI).